There’s no grey area when it comes to selling houses in probate courts. It can either be extremely easy or extremely tiring based on the choices you make.
I understand that dealing with someone’s demise can be pretty taxing, especially if you closely knew the person. Today, I’ll take one headache off your mind and help you make all the right choices. Stick with me till the end, and you’ll understand all the nuances of selling houses in probate, starting with what exactly the process is.
If the property owner passes away without appointing an heir through joint ownership, living trust, or a Transfer on Death deed, the probate courts take charge and appoint the legal inheritor as the executor to sell off the estate.
In layman’s terms, probate is the process of selling the estate and handing over the assets to legal heirs in the event of someone’s death. It’s supervised and run by probate courts under the Uniform Probate Code (law), which is followed by every county in the United States. In addition to this, I suggest reading up on probate laws specific to your state, such as Probate Laws in Georgia.
The first thing you need to do is hire an experienced probate attorney and have him/her go over the legal documents with you to understand whether the probate court is necessary or not. You also need information on the other assets and potential beneficiaries to escalate the process quickly. I’ve made this Ultimate Checklist for Pre-Probate Info Gathering to make it easy to gather all the required data before heading to the probate courts.
Don’t get carried away with just the checklist, though. We still need to cover many important points. Did you know it’s illegal for you even to clean the house or have a garage sale until the court has given you the legal authority to do so?
How does the probate process work?
In some cases, the probate court procedure is a long and tiring process that can lead to certain problems if it’s not handled correctly. I strongly recommend taking the time and hiring an experienced probate lawyer for your proceedings.
Step 1: Filing The Petition
The first and foremost thing you need to do is discuss the legal requirements with your lawyer, complet your information checklist, and file the petition in the probate court.
Once you have all the correct paperwork and are done filing the petition, it might take weeks or months before you get your court date. Meanwhile, you aren’t allowed to do anything with your property. In some states, even wrapping up the water pipes or taking the mail is an illegal offense. Again, you need to consult with your lawyer about your state’s laws before taking any action.
Once the court approves your paperwork, you’ll be given a Letter of Administration (if there’s no will) or a Letter of Testamentary (if there’s a will), which give you the right to transact business on the estate.
Step 2: Giving Notices
You’re legally required to notify all the interested and associated parties through a court-approved communications channel. There’re two types of notices that you’ll hand out.
First is the Notice of Probate, which is to be given to all the beneficiaries notifying them about the ongoing procedure to make inheritance claims or contest the will.
The second is called a Notice of Creditors, which is to be sent to all the financial organizations to which the deceased owed debt such as credit cards and mortgages. It’s recommended to send this notice early in the process because the companies take two to six months before confirming the exact debt.
Step 3: Assessing The Current Value
After you know how much debt is owed, the next step is to figure out how you’re going to pay that debt. This is done by doing an Inventory of Estate – it includes real estate, jewelry, cars, heirlooms, and financial assets such as cash, bank accounts, insurance policies, and stocks.
After you’ve got a list of the assets, you need to find the Date of Death value of these assets. It is the actual value of an asset on the date of death and will make the administering process easier.
Step 4: Administering the Estate
This is the longest and most taxing part of the probate procedure because you are now the court-approved executioner and great power comes with great responsibility. The first step is liquidation. You have to submit policy claims, settle debts, pay off remaining taxes, as well as sell and distribute assets to the legal beneficiaries.
When it comes to dissolving the assets, the biggest one is the house, which can take a long time. Here’s my complete guide on how you can sell a house quickly by yourself without needing a realtor.
Selling a house in probate is very similar to selling any real estate provided that you have the Right to Independent Administration approved by the probate court of your state.
The independent administration gives you the authority to make all the decisions regarding the sale of your house. In case of dependent administration, you’ll need a court’s approval or the approval of a representative of the court for decisions regarding the sale of the house.
To get the Independent Administration rights, you’ll have to apply for unsupervised administration. And, unless you are the sole beneficiary of the estate, you’ll need a waiver of process and consent to probate from every other beneficiary.
In the case of dependent administration, the final sale is done within the court and has an extra process called the Overbid Process. The overbid process works like an auction, everyone is provided with the buyer’s offer, and then the court starts the bidding. Once the bidding is done and the court approves the final buyer, the house is considered sold.
Step 5: Closing The Estate
This is the final part of the probate procedure, and yes, a lot can still go wrong. After the debt’s paid and the estate’s sold, the last step is for your probate attorney to start distributing assets.
However, it’s advisable to let the attorney file the final petition and have it approved by the court. Because in some cases, someone can make a new debt claim on the estate, and you as the executioner will be held responsible for the pre-mature distribution of assets.
What assets don’t go through probate?
While going through the probate court sessions and a million other things, don’t forget to take care of the assets that don’t go through probate. As the name suggests, non-probate assets are those assets that have a specific condition or pre-determined heir and don’t need to go to a probate court for settlement.
- POD or TOD Assets: Health savings accounts and certain deeds are “Payable on Death” or “Transfer on Death” assets that ask for a nominee during the sign-up process. Hence, they don’t require probate courts. Similarly, joint assets don’t require probate either.
- Tenants by the Entirety: These are the special type of joint assets that an individual owns with their spouse.
- Other Assets: Life estate and other assets with beneficiaries like insurance, IRAs, and 401(k) don’t require probate either.
Two Things to Understand Before Probate Process Begins
Now that you know how the probate process works, it’s imperative that you understand the timeline of the entire legal procedure and when it’s the right time to go for probate sale.
How long does the probate process take?
Selling a house on probate in the United States takes about six months on average. However, it can take anywhere between three months to several years, depending upon the complexity of your situation and state laws.
And, that’s just the timeline for selling the house after you receive the permission and authority of execution from the probate court. Check the table below for the complete timeline of the probate procedure.
|1||Notice of Probate||1 to 2|
|2||Petition to Probate||1 to 4|
|3||Notice to Creditors||4 to 6|
|4||Inventory and Appraisal||1 to 3|
|5||Property Sale||2 to 6|
|6||Final Accounting & Closing the Estate||2 to 5|
Why should you wait before selling a house in probate?
Another question that I’m constantly being asked is whether you should wait a certain amount of time before putting the house on sale and if yes, then how much time is considered proper.
You must wait for six months after getting the execution authority from the probate court because the creditors have a six-month period to file their claims and petitions in the state of Georgia.
Only those creditors who submitted all the required documents by time are qualified for payment. The inheritor or the executioner isn’t liable to pay the creditor who comes after the six-month waiting period is over.
Can you sell a house without probate?
In some cases, it’s possible to sell a house (property estate) without the probate courts, but you (the inheritor) don’t have the authority to choose. It can happen if the deceased legally gave the property to someone via a living trust, joint ownership, or Transfer on Death deed.
A Transfer on Death deed is a simple and straightforward legal document that names the heirs of your property estate in the event of your death. In some ways, it works like a will (for assets) and is directly applicable in probate courts. On the other hand, a living trust works exactly like a will and is used by people concerned with privacy as the details of a living trust aren’t public records.
Here’s more information on the transfer on death deed and living trust by the American Association of Retired Persons (AARP).
If you have any other doubts or need further assistance with the probate process, we would be happy to help you anytime.